Morro Bay Faces Power Plant Conundrum

Special to The Times

Drivers heading north up California 1 depart the majestic coast at Pismo Beach and, for about 25 miles, turn into the heart of San Luis Obispo County. Their reward is reaching Morro Bay and Morro Rock, one of the most recognizable landmarks on the California coast.

Now, residents see an opportunity to improve views of the rock from town and from the Pacific Coast Highway and coincidentally freeing up prime real estate on the oceanfront Embarcadero. But that means -- unusual for this eco-conscious region -- siding with a power company against environmentalists.

The City Council and nearly two-thirds of locals (in a nonbinding referendum two years ago) favor the same plan as Duke Energy. The company's ocean-cooled power plant, with its 45-story-high smokestacks, has marred the skyline and blocked views of Morro Rock for about half a century.

Duke Energy wants to expand capacity from 1,000 watts to 1,200 watts at a location just north of the current power station, but in a facility with a much lower profile. Stacks would be 145 feet tall, rather than the current 450 feet, and smaller buildings would be built away from the town's waterfront.

In a land swap, the city of 10,000 would acquire 13 acres at the current location, which could be turned into a park or, perhaps, waterfront shops and restaurants. Morro Bay also would receive a windfall in taxes and fees.

Project Faces Opposition

But Duke is threatening to kill its plans if environmentalists and regulatory agencies continue to push for change -- particularly a conversion to air cooling instead of ocean cooling.

The change is favored by many because it would mean no more ocean water would be pumped into the plant, where it cools turbines, and then returned to the ocean, where it can harm fish, crabs and the larvae of other marine life in the Morro Bay Estuary.

Officials at the Charlotte, N.C.-based company have threatened not to go ahead with the $800-million upgrade -- killing the hopes for additional power and the tax incentives -- if they cannot build the lower-profile plant north of the current location.

A Duke Energy spokesman, Pat Mullen, said the company strongly believes that it must have saltwater cooling to make the project work. Although there is a debate about how much additional money a dry-cooling plant would cost, Mullen said the company is factoring another $120 million into the project.

So Morro Bay faces a conundrum:

No changes would mean the old power plant continues to loom on the waterfront, blocking potential civic improvements and views of the "Gibraltar of the Pacific Coast."

If Duke and many civic leaders get their way, the smaller plant would leave more of the waterfront open and clear the way for the park or other improvements. Vistas of towering Morro Rock would be unfettered along much of the drive on California 1. The use of ocean water could be trimmed somewhat, but sea life would continue to suffer.

If environmentalists and regulators get their way, the new air-cooled plant would be built farther from the coast than the current plant, but with blocky buildings as much as 100 feet high and stacks less than one-third the size of the current ones. Experts say that sea life would benefit substantially. Advocates hope this course also might set a pattern for improving or replacing nearly two dozen other ocean-cooled power plants along the California coast.

Morro Bay leaders threatened at a December state hearing to pull all their permits for the plant if Duke is forced into the dry-cooling technology. They hope the smaller, ocean-cooled plant can go ahead. The city could use its local land use authority to try to stop construction.

"Basically, dry cooling would violate 25 local land-use policies or ordinances," said City Atty. Rob Schultz. "The height of it, the size of it, the noise of it. The new project is going to need easements and agreements from the city, and part of the dry cooling would be on city property."

Schultz is convinced that, if the state requires dry cooling for environmental reasons, the mammoth project simply won't happen, either because Duke would drop out or the city wouldn't play along.

The energy company is particularly worried that other plants could be forced to go to dry-cooling systems in the future, said Jack McCurdy, an activist with Coastal Alliance on Plant Expansion.

"What Duke is worried about is the potentially historic turning point involved here," he said. The state "Energy Commission has never required any plant to use dry cooling on the coast. This could be an important first."

The Morro Bay power plant dates from the mid-20th century, when new oceanfront power plants fueled California's industrial and suburban expansion. Many were powered by fuel oil but, like Morro Bay, switched to natural gas.

Tall stacks designed to disburse particulates were their hallmark. Twenty-four such plants remain along the California coast, according to the California Energy Commission, including ones in El Segundo and Redondo Beach.

The plants can suck in hundreds of millions of gallons of seawater daily to cool turbines, then return water that has been heated in the plant to estuaries, harbors and the open ocean. Duke is seeking a permit that would allow the use of 475 millions of gallons of saltwater a day at its new Morro Bay plant, down from its current permit that allows 725 million gallons.

The California Energy Commission staff, California Department of Fish and Game, California Coastal Commission and National Marine Fisheries Services all oppose permitting Duke to use saltwater cooling, saying it would cause extensive harm to marine life in the estuary.

The Energy Commission staff determined that 17% to 33% of marine life larvae in the estuary would be trapped and killed in the new plant. Duke's experts put the proportion at 8% to 10%.

The Regional Water Quality Control Board alone has decided to approve a preliminary permit for saltwater cooling, with provisions for habitat conservation in Morro Bay to offset environmental damage. The Energy Commission board has final say over a construction permit, and its decision is many months away.

Limits Sought Elsewhere

As the Morro Bay project goes through the process, the Energy Commission staff is trying to limit saltwater cooling elsewhere. The agency's staff is supporting the use of reclaimed water instead of seawater -- or a combination of both -- at plant renovation projects, including those at El Segundo and Portrero on San Francisco Bay.

"Each facility is evaluated on its own merits," said a commission spokesman, Chris Davis. "But avoiding having a negative impact on aquatic biology is a factor."

The state's largest coastal plant remodeling, a Duke project at Moss Landing near Monterey, was allowed to use saltwater cooling. When it was completed in July, it became the most prolific energy plant in California, spinning out 2,500 watts, or enough to supply 2.5 million homes. (Morro Bay would not only increase its production 20%, but use fuel more efficiently, according to a Duke spokesman.)

But the Energy Commission's Davis said it is pointless to compare Morro Bay and Moss Landing, or to assume that Morro Bay would be able to use water cooling just because the larger plan can.

"Moss Landing might have been similar to Morro Bay," he said. "But we are not just going to run Morro Bay through the process. We're looking at it separately."

Duke already has been affected by an energy industry downturn, laying off key managers for many of its West Coast projects. Central Coast environmentalists had hoped that meant the plant expansion would be mothballed or killed altogether, but Mullen said it is wise policy to continue pursuing the plant.

"It's just premature to say, until we get the permit, whether the project will go forward," he said. "It depends on the demand for electricity, the regulatory climate and whether we have the added cost of dry cooling. If it works, great. If not, the existing power plant still produces energy."

Morro Bay Mayor Bill Yates was elected in November, in large part because of his support for Duke's plans for the new plant. He owns a jewelry store on the Embarcadero, a bayfront mile of tourist businesses and fishing boats dominated at its northern end by the current plant.

"It would certainly beautify the city to get the new plant," Yates said. "Not that I view power plants as that beautiful. But you just have to look at what it would replace."

For The Record Los Angeles Times Thursday January 23, 2003 Home Edition Main News Part A Page 2 National Desk 15 inches; 563 words Type of Material: Correction Morro Bay -- An article in Monday's California section gave the incorrect power output for the Duke Energy electric plant in Morro Bay. The plant produces 1,000 megawatts of energy and may be increased to 1,200 megawatts. The story incorrectly stated the output in watts. The same mistake was made regarding a power plant in Moss Landing, which produces 2,500 megawatts, not watts, of power.
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